FSA Age-Out? And Medicare
Hi, on a spouse turning 65 in early 2024 there are Medicare and FSA questions that have arisen for a married couple. First, can the (62-aged) younger spouse’s FSA from her current job still be used for the post-65 spouse who is qualifying for Medicare? I believe the answer is “yes.” The IRS guidance says FSA can be used for a “spouse” without qualification and I do not see an age-out for this such as for a child. The post-65 spouse is likely to have $2000 or more in drug expenses alone in deductibles and copays which are not paid by basic Medicare. So the younger spouse’s FSA is tentatively set at the maximum about $3k. If the FSA is not eligible to pay for the drugs, the selection of FSA amount would be less. Any comments please. Second, assuming the answer to the prior question is yes, in choosing a Medicare gap plan D for covering the drugs, should the older spouse select a high deductible D plan? I think the answer to this is also “yes.” This seems to be the way to be able to maximize the application of FSA funds. The way I understand it, the FSA funds cannot be used to cover the Part D premium, but CAN be used for the deductibles and copays. Third, if the two answers above are “yes,” and the high deductible plan D is accordingly selected for the drug coverage, do the drug manufacturer’s coupons apply to offset the cost of the drug? The hope is that yes they do, but the qualification is that commercial insurance must be in place and must be requiring high payments. The way I see the language of these coupons, the Plan D is still “commercial insurance” and given the high deductible the expenses would still qualify for the coupons. Then, of course, if the answer to all three questions above is “yes,” the question of the amount of FSA set-aside account to choose can be impacted and the younger spouse may want to choose a lower amount like $2000. I think the answer to that can only be tentative, and it may be relatively speaking a nice problem to have. Comments please!
submitted by /u/Jaded-Bookkeeper-807
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